Once again we are witness to the monthly ritual in which two government agencies, at one and the same time, tell us two completely different stories about the same animal.
The Government Assessor grabs one leg, examines 5,800 transactions in the residential real estate market in the first quarter of 2011 and in the final quarter of 2010, out of about 55 thousand homes that changed hands, and tells us that, in the first quarter, home prices rose 2.5%.
The Ministry of Finance grabs another leg, and examines just 1,500-2,000 transactions per month, about a quarter of the total market, which does not inhibit them from running to tell us that home prices fell 1% in March and by 2.5% in the first quarter.
So is it the galloping horse of the Government Assessor, or the waddling duck of the Ministry of Finance? Should we believe the data on four-room apartments collected by the Government Assessor, which fail to take into account that in Petah Tikva and Netanya, for example, people long ago decided to go for large apartments only, and there is hardly any construction of four-room apartments; or should we believe the Ministry of Finance's database, which only takes into account new homes, and only those for which there were exactly equivalent homes for sale in the month before the survey month. The ministry does not reveal to us how many homes that leaves on their thinned-out spreadsheet, or how it deals with the fact that the homes that remain with the contractor from one month to the next are by definition those on which he has to compromise over price.
But wait: any minute now we will get the Central Bureau of Statistics figures, which put all homes together in one basket, without seeking to discount factors such as upgraded standards from year to year, the creeping increase in apartment sizes, and so forth.
There is no escaping the fact that in real estate, unlike tomatoes and fuel, and certainly in a small neighborhood like Israel, there will never be two completely identical products on the basis of which to gauge the monthly change in price. Therefore, government officials and interested parties like contractors, agents, assessors and so on mainly set out to confuse us. And always, but always, the tunes they play will be the ones whoever is paying them calls.
Published by Globes [online], Israel business news - www.globes-online.com - on May 12, 2011
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